NEW DELHI: A few days ago, Switzerland ratified the global convention on automatic exchange of information on financial transactions. With this, India will not have to ask the Swiss authorities for specific bits of information which could get delayed or denied altogether. It will now automatically be able to access transactions made by Indians with Swiss banks.

But has the stable door been closed long after the horse has bolted? It seems so if you consider the trend of Indian deposits in Swiss banks. In the past few years, Indian deposits in Swiss banks have fallen. Probably, the depositors sensed Switzerland’s decreasing ability to protect their secret stash.

The money held by Indians in Swiss banks stood at a record high of 6.5 billion franc (Rs 23,000 crore) by 2006-end. However, it has been falling since then, except for in 2011 and in 2013 when it had risen by over 12 per cent and 42 per cent, respectively.

It declined to a record low of 1.2 billion franc (about Rs 8,392 crore) at the end of 2015, according to data from the Swiss National Bank.

In 2016, India slipped to 75th place in terms of money held by its citizens with banks in Switzerland. India was placed at 61st place in 2015, while it used to be among top-50 countries in terms of holdings in Swiss banks till 2007. India was ranked highest at 37th place in 2004.

Such rapid decline in Indian deposits in Swiss banks leaves the Indian government with less chance of making big catches.

Now that the account holders know their cover will be blown, the decline in deposits will only quicken. Since the recent information-sharing deal with Switzerland will come into effect from September 2019, more Indians could shift illegal money from their Swiss bank accounts to other safer tax havens.

Therefore, the deal will do little by way of bringing back black money from Swiss accounts. By the time the treaty comes into effect, there might not be much money left to scan.

However, the deal will have a deterrent effect. The black money hoarders will be under pressure with one big safe haven gone off their list. The deal virtually rules out Swiss banks as safe havens for Indian black money hoarders. But with only Rs 8,392 crore Indian money lying in Swiss banks, even if this option closes, it is not going to narrow their prospects too much.

Between six and seven trillion dollars worth of black wealth lies hidden in tax havens across the world, according to an estimate by economists from the Bank of Italy in 2016. If Indian share of these undeclared assets is determined on the basis of the country’s share in actual declared portfolio assets, it would be Rs 25,000-30,000 crore. However, if it was the same as India’s share of global GDP, the amount would be Rs 8.9 to 10.5 lakh crore.

In any case, the numbers show that most of the black money is already lying elsewhere since Swiss banks had only Rs 8,392 crore Indian money in 2015. And now after this deal, more Indian money will fly out of Swiss banks.

The Swiss deal will best help Indian government as a deterrent and will be a part of the series of steps the government has taken to tighten control over the black money economy. If the government is able to sign such deals with safer havens, the black money economy will take a big hit. India has already amended double taxation avoidance agreements with Singapore, Mauritius and Cyprus to plug round-tripping of funds.